Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression

Examining the relationship between inflation and economic growth has been the subject of considerable theoretical and empirical research since understanding the inflation-growth nexus is very important for monetary policy (Seleteng et al., 2013). Traditionally, the relationship between inflation and economic growth is linear; the impact of inflation can be neutral, positive or negative depending on whether money is super-neutral (Sidrauski, 1967), substitute for capital (Mundell, 1965; Tobin, 1965) or complementary to capital (Stockman, 1981; Fischer, 1983).